TNAG-2710-FCO40-3916-House-of-Commons-Select-Committee-on-Foreign-Affairs-and-Par-1993 — Page 190

In the meantime, we are maintaining momentum on the airport to avoid expensive slippages and cost increases.

- The project represents excellent value for money. Any substantial cost reduction would compromise the scope of the project and would not lead to the construction of the first rate airport which Hong Kong needs.

ECONOMY

GDP

- Economic fundamentals in Hong Kong remain very strong. Probably sounder than in any other community in the world. grew by 5% in 1992, and is expected to remain in the range of 5-5.5% in 1993. Trade with China continues to boom. Investment will be sustained by Government infrastructure projects.

- The Hang Seng index is traditionally volatile. It rose by 28% during 1992 and stands about 3 times as high as it did

3 years ago, reflecting underlying strength of Hong Kong economy.

CONTRACTS AND FRANCHISES

- The Joint Declaration and Basic Law contain guarantees that contracts signed before 1997 will continue to be valid after 1997 if they do not contravene the Basic Law. It is hard to imagine that any contract or franchise in force in Hong Kong before 1997 would contravene the Basic Law.

KAM Saunders

Hong Kong Department

071 270 3544

April 1993

bullpoints.2.BACKBRIEF.JRB